The UK financial regulator FCA had extended market access for investment funds from the European Union beyond the end of the transition period following Brexit for up to three years. Alternative investments funds, however, are excluded from the so-called Temporary Permissions Regime (TPR).
‘The TPR will enable relevant firms and funds which passport into the UK from the EEA to continue operating in the UK from the end of the transition period,’ the FCA said. ‘The regime will allow firms and investment funds time to obtain authorisation or recognition in the UK, if required.’
International alternative investment fund (AIF) managers are explicitly excluded from the TPR. ‘After the transition period, only firms with their registered office in the UK can obtain permission to manage an AIF,’ according to the FCA.
Over 1500 firms had already asked the regulator for an extension of market access by September, with this number expected to rise further until the end of the year. ‘We expect many of these firms will want to seek full UK authorisation where this is necessary for them to continue operating in the UK over the longer term,’ the FCA added.
Active place of business
To be eventually granted authorisation to sell their services and products in the UK after the TPR ends, EEA firms are expected ‘to have an active place of business in the UK. It will typically not suffice if a firm’s local presence has little or nothing more than a UK registered address.’
‘In addition, we will need assurance that the personnel, including management, and the systems and controls (taking into account any offshore or outsourcing dependencies) are adequate for the firm’s UK activities to be effectively supervised’, the FCA added. ‘Where relevant we will also assess whether the UK operations are appropriately financially resourced by the firm as a whole, to avoid the risk that the firm cannot meet any legal and regulatory obligations arising from the operations of the branch.’
The UK’s step had not been reciprocated by the EU. UK firms will need to have a registered office, supervised by local supervisors, from 1 January 2021 in order to be able to sell their services in the bloc.